Medicare Advantage is quickly growing in popularity among Medicare beneficiaries. Older adults can get quality healthcare for relatively low premiums, making these plans attractive to many.
But before you enroll in a Medicare Advantage plan, you need to know how these plans work and what coverage you can expect them to provide.
What Is Medicare Advantage?
Medicare Advantage plans fall under Medicare Part C. They are an alternative to Original Medicare with Medicare supplement insurance, also known as Medigap policies. The federal Medicare program contracts with private insurers to offer these plans to any eligible individual and enrolls in Medicare Parts A and B.
Instead of getting their benefits from the federal program, any individual who enrolls in an MA plan gets their benefits from a private insurance company. However, you must still pay your Part B premium, as well as any monthly premium associated with the MA plan.
All Part C plans have at least as much coverage as Medicare Parts A and B, but many offer additional benefits like dental care, vision and hearing services, transportation to and from doctor's appointments, meal delivery, gym memberships, and others. The exact benefits and costs will depend on which plan you choose.
How Do Medicare Advantage Plans Work?
Each Medicare Advantage plan uses a provider network within a geographical area. You must live inside the plan's area to enroll in the plan. Then, you must see providers that participate in your plan's network for your coverage to work. There are several types of networks available.
Health Maintenance Organizations (HMOs) are popular Advantage plans because of their low premiums - sometimes as low as $0 per month. (This does not make them "free" as there will be costs outside the premium!) The downside of HMO plans is that their networks are usually very narrow, not giving participants much choice in providers. Of course, if you live in a bigger city, you'll have more choices than those who live in rural areas. If you receive care outside of your HMO network, you will be responsible for all costs, except in emergency situations.
Preferred Provider Organizations (PPOs) are another type of Part C plan. PPO networks are often more broad than HMO networks, which gives members more freedom to choose providers. Also, there will be coverage if you receive care outside of the network, but you will pay more out-of-pocket.
A hybrid of these two plans is called an HMO-POS (Point of Service) plan. These plans belong to an HMO network but offer some benefits outside of the network. However, like PPO plans, the member's out-of-pocket costs will be higher than if they had stayed inside the network.
Other types of Medicare Advantage plans include Private Fee-for-Service (PFFS) plans and Special Needs Plans (SNPs). PFFS plans allow providers to choose whether or not to accept contracted amounts for services. Special Needs Plans are offered only to individuals who meet certain criteria. For example, you must have a specific chronic condition or reside in a nursing home facility to qualify for an SNP plan. SNPs tailor their benefits to the chronic condition being covered.
Regardless of which type of Medicare Advantage plan you choose, you'll also need to know if the plan offers prescription drug coverage. Plans that do are referred to as MAPD plans. If a plan does offer drug coverage, you will also need to check its drug formulary to make sure any medications you are currently taking are covered under the plan.
